What is labour market data telling us?

What is labour market data telling us?

Canada’s confusing labour statistics suggest two different stories about the Canadian economy--advisors mananging the retirement funds of clients would be wise to note the terms of the debate.

When the April job numbers came in this May the data showed the Canadian economy shed 28,900 positions. At the time most analysts expected a moderate gain. The uptick in the numbers left some wondering if Canadians were becoming discouraged in their job search.

Looking into the numbers, the unemployment rate remained at 6.9% but the labour market participation rate — those still actively looking for work — lowered to 66.1%. Did the decline mean there is a vast number of Canadians sitting at home, too discouraged to even bother looking for work? Or is there something else happening here?

A Royal Bank report released last week puts a more positive spin on the numbers. According to the analysis, the proper reading of the data suggests the baby boomers are beginning to retire in greater numbers. This is as expected--the long-awaited boomer retirement wave is finally being picked up in the labour data.

RBC economist Nathan Jansen points out it is those who are 65-years old and older who are responsible for most of the increase in the category ``no longer looking for work.

“The increase in the category is not a result of discouragement, but simple demographics--the boomers are aging out of the work force,” Jansen was quoted as saying.

Janson points out that a 2007 Statistics Canada report predicted precisely this. As the boomers began to retire, the Stats Can report suggested the participation rate would start to fall about this point and that the wave of boomer retirements would drive participation rates down sharply.

Canada must be different from the U.S. where (from 1992 - 2012) Labour Force Participation Rates increased from 29.7% to 40.5% for those 55 and older; but decreased from 83.6% to 81.4% for those between 25 and 54 years of age and decreased from 66.1% to 54.9% for those between 16 and 24.In the United States an increasing (not decreasing) number of Boomers are seeking employment, hence the increasing participation rates.

I guess Canadian Boomers are just better at saving and investing than their American friends??